Executor &
Trustee Fees
Where a fiduciary’s fee comes from, how it is computed under the instrument or state statute, whether it is charged to income or principal, and what that means on the fiduciary return.
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Where the fee authority comes from
A fiduciary’s compensation is set by a hierarchy of sources, and the calculation starts with identifying which one controls:
- The governing instrument. When the will or trust sets the fee, whether as a percentage, a schedule, or a reference to a corporate trustee’s published rates, that controls. Under the Uniform Trust Code (§708) and statutes based on it, a court can still allow more or less when the trustee’s duties are substantially different from those contemplated or the stated fee is unreasonably low or high.
- State statute. When the instrument is silent, some states fix a commission schedule, most often for personal representatives of probate estates and, in New York, for trustees.
- Reasonable compensation. Elsewhere, the fee is what is reasonable under the circumstances. The factors commonly applied include local custom, the fiduciary’s skill and experience, time devoted, the amount and character of the property, the difficulty and risk involved (including discretionary distribution decisions), the cost of comparable services, and the quality of performance.
- Court approval. Some jurisdictions require an order before commissions are paid; others, like Florida for personal representatives, presume the statutory amount reasonable without one. Special rules can apply when the drafting attorney also serves as fiduciary.
Statutory schedules
Where a statute supplies the fee, the calculation turns on the base the statute uses, the tiers, and any split between co-fiduciaries. The base differs by state: some start from the inventory value, others add income or gains, and New York computes separate commissions on sums received and sums paid out.
Three state schedules
| State | Commission tiers | Base and key rules |
|---|---|---|
| California (Prob. Code §10800) | 4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000; 1% of the next $9,000,000; 0.5% of the next $15,000,000; above $25,000,000, a reasonable amount set by the court | Inventory value, plus gains over appraisal on sales, plus receipts, less losses on sales, without regard to encumbrances. The attorney’s statutory fee uses the same schedule. Extraordinary services are allowed separately. |
| New York (SCPA §2307) | 5% of the first $100,000; 4% of the next $200,000; 3% of the next $700,000; 2.5% of the next $4,000,000; 2% above $5,000,000 | Computed half on sums received and half on sums paid out. Property received or distributed in kind counts as money; specific legacies are excluded. Limits on multiple full commissions for co-fiduciaries. |
| Florida (Fla. Stat. §733.617) | 3% of the first $1,000,000; 2.5% over $1,000,000 to $5,000,000; 2% over $5,000,000 to $10,000,000; 1.5% above $10,000,000 | Inventory value of probate assets plus income earned during administration. Presumed reasonable in formal administration, without a court order. Extra compensation for extraordinary services; limits for co-representatives. |
Trustee commissions are more often set by the instrument or by a reasonable compensation standard, but New York is a notable exception with an annual schedule.
Annual and paying commissions under SCPA §2309
| Principal value | Annual commission |
|---|---|
| First $400,000 | $10.50 per $1,000 |
| Next $600,000 | $4.50 per $1,000 |
| Balance | $3.00 per $1,000 |
| Paying commission | 1% of principal paid out |
Charging the fee to income or principal
Which account bears the fee changes what the income beneficiaries receive versus what the remainder beneficiaries keep, so the allocation belongs in the calculation, not after it. The instrument controls; absent direction, state principal and income law applies:
- Uniform Principal and Income Act (1997): one-half of the trustee’s regular compensation, and of investment advisory and custodial fees, is charged to income and the other half to principal. Fees computed on principal at acceptance, distribution, or termination are charged to principal.
- Uniform Fiduciary Income and Principal Act (2018): one-half is charged to income to the extent income is sufficient, with the balance to principal, and an independent fiduciary may charge more to income.
- New York: annual trustee commissions are charged one-third to income and two-thirds to principal, as shown above.
States have adopted these acts with variations, so the enacted version in the governing state controls.
Treatment on the fiduciary return
- Deductibility: trustee and executor fees are costs that would not have been incurred if the property were not held in the trust or estate, so they are deductible under IRC 67(e) rather than as miscellaneous itemized deductions.
- Bundled fees: under Treas. Reg. 1.67-4, a single fee that covers both fiduciary services and investment advice must be allocated between them, using any reasonable method. The investment advice portion is a miscellaneous itemized deduction, and those are now permanently disallowed (IRC 67(h), as amended by P.L. 119-21, §70110, for tax years beginning after 2025).
- Tax-exempt income: fiduciary fees are indirect expenses. A reasonable portion must be allocated to tax-exempt income and is not deductible (IRC 265; Treas. Reg. 1.652(b)-3(b)); the rest can be allocated among the items of income in DNI.
- Estates, Form 706 or Form 1041: under IRC 642(g), the same administration expense cannot be deducted on both returns. Taking fees on the 1041 requires a statement waiving the estate tax deduction, which is irrevocable once filed; the fees can be divided between the two returns. Commissions are deductible on the 706 only if they will actually be paid, and a bequest in lieu of commissions is not deductible.
- Timing: a cash-method trust or estate deducts fees in the year paid. Fees paid in the final year that exceed income can pass through to beneficiaries as excess deductions.
Documenting the calculation
A fee that is computed correctly but documented poorly still invites objections. We show the governing source, the base and valuation date, each tier, any co-fiduciary split, and the income and principal allocation in the fiduciary accounting, so the figure can be traced from the instrument or statute to the checkbook. Where compensation rests on reasonableness, contemporaneous time and task records are what support it.
Whether a particular fee is permitted, and how a court will view it, are legal questions for counsel. Our role is the calculation, the accounting presentation, and the tax treatment.
What we handle
- Computing fees under the governing instrument or a statutory schedule, period by period
- Income and principal allocation of fees under the instrument or state law
- Presenting fees in court and informal accountings
- Allocating fees to tax-exempt income and among DNI items
- Unbundling fees under Treas. Reg. 1.67-4
- 642(g) elections and waiver statements for estates
- Final-year excess deduction reporting to beneficiaries